LoanDepot Inc (NYSE:LDI) shares are surging Friday morning on a combination of a bullish call and a favorable macroeconomic report. Here’s what investors need to know.
What To Know: The primary catalyst was a newly issued assessment from Citron Research, which argued the mortgage lender is severely undervalued.
Citron stated the market is pricing LDI like a “busted originator,” ignoring its valuable mortgage servicing division. The firm placed a $5 per share valuation on that division alone, more than double its recent trading price, likening its potential to a successful call it made on Rocket Mortgage.
Further fueling the rally was a dismal August jobs report. The U.S. economy added just 22,000 jobs, far below expectations and cementing the view that the Federal Reserve will be forced to cut interest rates, perhaps as soon as its September 17 meeting.
The prospect of lower rates is a significant tailwind for mortgage lenders like LoanDepot, as it reduces borrowing costs and can stimulate demand for new loans and refinancing, directly improving the company’s core business outlook.
Benzinga Edge Rankings: The stock’s rally is supported by Benzinga Edge data showing a positive price trend across short, medium and long-term horizons.
Price Action: According to data from Benzinga Pro, LDI shares are trading higher by 18% to $2.69 Friday morning. The stock has a 52-week high of $3.22 and a 52-week low of $1.01.
How To Buy LDI Stock
By now you're likely curious about how to participate in the market for LoanDepot – be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.
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